Is The IRA Beneficiary Designation of an Irrevocable Trust REALLY Irrevocable?

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For many, their Traditional Individual Retirement Account (IRA) represents their largest financial asset. Most retirees name adult individuals as their beneficiaries. Yet some IRA owners want to name a trust as a beneficiary of their IRA.
Naming a trust as an IRA beneficiary can have adverse income tax consequences. However, if the trust qualifies as a "see-through trust", then after the iRA owner's death, you can through the trust to the underlying trust beneficiaries, and the required minimum distribution rules will apply as if those trust beneficiaries were designated as beneficiaries.
One of the four requirements to get the favorable see-through trust tax treatment is that the trust be irrevocable. But just because you name an irrevocable trust as a beneficiary of your IRA does not mean that you cannot change our beneficiary.
It is not an irrevocable beneficiary designation. It is an irrevocable trust that is a beneficiary of your IRA. But an IRA owner can change their beneficiary at any time. So you're not locked into anything permanently by naming an irrevocable trust as a beneficiary of your IRA.
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This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Estate Planning Attorney

[@dannyjensen4954]

I’m checking back. Thanks for your videos. I did do a conduit trust for my Mom who has passed. My Dad is the beneficiary now and I am trustee. The IRAs were transferred to an IRA trust account at Fidelity and Vanguard and I was able to use my Dads tax ID in the trust account and I have Vanguard distribute the RMD directly to the beneficiary. The 1099Rs will have my dads tax Id. No trust tax Id has been necessary. I don’t recommend getting a trust tax Id as long as you have one beneficiary. Managing the conduit trust is a bit of a hassle but I have paid no legal fees since I set up the IRA trust for my mom. When my Dad passes, my hope is to move the IRA trust assets into IRA accounts for the children. This seems to be working well.

[@mercurynfo]

“Irrevocable” or a revocable trust that becomes irrevocable by reason of the grantor’s death. My living trust is the beneficiary of my IRAs but once I die becomes irrovocable. Intervivos living trust transforms into a post-mortem irrevocable trust that gets funded with decedent’s IRA property (if properly designated with custodian and the trust qualifies as a designated beneficiary (4 reqts apply)). My wife is the see-through beneficiary who hopefully with stretch out my IRAs in the event of my demise.

[@larrykruck1572]

some companies do not care if trust qualifies as see-thought and just go with the 5 years withdraw

[@billligon4005]

Please explain the basics of a Revocable Living Trust. When my attorney set up my Trust I had a lot of questions but thought that each time I called with questions I would be billed for each minute it took, so I never called to ask questions about how to I put things in "The Trust"??

[@mikelarson5333]

Can I roll over a portion of my 401k into an irrevocable trust along with my home and other assets for asset protection against Medicaid, creditors, etc.? In the state of Washington they have a five year look back from Medicaid and a buy down of assets before going to a nursing home. I am 65 and in good health. Thank you.

[@gale3684]

Is there a tax benefit to having trust as beneficiary as opposed to naming individual beneficiaries?

[@NeedsMoreToys]

No tax benefit. In fact the opposite. More tax is collected up front if Trust is beneficiary.

[@curtevans7662]

Paul....how is a see-thru accumulation trust taxed if the only asset left is an inherited Roth Ira and the distribution period is over 4 years from DOD of decedent? Are only the yearly "earnings" taxed or is the principal "tax-free" thru that distribution period? Can your trust allow the beneficiaries to use their discretion and can collect the yearly earnings between distributions to avoid the possible 37% trust tax? Or?